If nothing else, at least this year’s statement hasn’t been met with the consternation and upheaval caused by last year’s announcement, when a Liz Truss led government triggered a widespread gilt selloff by seeking to push through a roster of unfunded tax cuts.
Nevertheless, the response to the 2024 announcement has probably still not been what the Chancellor, Jeremy Hunt, would have hoped for – a mixed reception with questions raised over the extent to which policies will actually deliver.
The Chancellor’s stated focus was to support economic growth. The fact that he subsequently referenced backing “British business with 110 growth measures” shows how difficult that task will be.
Reductions in national insurance, investments in technology (particularly AI) and manufacturing, and business rate cuts sound good on paper. However, they come with a sizeable counterpoint from commentators – that the current state of the economy may not give as much headroom as the government has indicated. The Office for Budget Responsibility (OBR) has downgraded expectations for growth to 0.7% next year, having previously predicted in March that 2024 growth would be 1.8%.
And, what of investment and pensions issues? An overhaul of Individual Savings Accounts (ISAs) has potentially positive implications for some investment providers, with confirmation that Long-Term Asset Funds (LTAFs) and Property Authorised Investment Funds (PAIFs) will be eligible for inclusion in an ‘Innovative Finance ISA’. Consultation over pensions reforms and the potential creation of a ‘pot for life’ model (where savers would have a single pension pot and could require employers to pay into that rather than designated corporate schemes) may also have an impact, though it remains to be seen if this will actually come to fruition.
All in all, there was not too much for the investment industry to get excited about. The statement does, however, reiterate that the responsibility for investment decisions and protecting one’s financial future lies firmly with individual consumers themselves. This (continued) move to more of a retail-like landscape is something providers will need to be very conscious of, with brand messaging and profile playing an increasing role in business’ success.
Much, then, for the UK market to chew over, particularly as an election increasingly looms large.